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AMP Capital concluded “the actual number of instances where votes disappear is likely to significantly exceed 4 per cent".

A government inquiry into proxy voting in 2008 argued the system could be improved if more companies established an electronic proxy voting capability that provides a clear audit trail. Despite the recommendation, nothing has changed.

The issue has become critical with the introduction of the two strikes rule for executive pay. If shareholders twice vote down proposed remuneration reports, they have the power to remove a board.

Votes can go to the wire.

In September, the remuneration report for grocery company Metcash passed via a show of hands.

When proxy votes cast prior to the meeting became public, they showed a margin of just 0.6 per cent of votes.

The Australian Shareholders Association says it could have voted down the Metcash remuneration report using its proxies if it had known the vote was so close.

Computershare managing director Greg Dooley says as the system relies on humans, there will be mistakes.

“Somehow a number gets changed or there have been famous instances where noes have been changed to yesses or vice-versa," Mr Dooley said.

But there are also systemic issues. Notice of meetings and mailing of voting entitlements go out a month prior to meetings, but trading before the meeting means holdings change.

If there is a discrepancy, all their votes are discarded, Mr Dooley said. “In the end you have to cast out the lot," he said. “You end up throwing out the baby with the bathwater."

The push for online voting has gained momentum. In the US online voting tripled shareholder voting at companies that introduced it in 2009.

Australian Shareholders Association chief executive Vas Kolesnikoff said it was time for updated systems.

“With just a few bits of paper, how does everybody know that everything’s been accurately counted and recorded?" she said.

Proxy voting has been implicated in a string of controversial corporate outcomes over recent years.

Private equity firm Archer Capital was successful in its $370 million takeover of Rebel Sport in 2007 despite a group of three fund managers – who held 24 per cent of the stock – voting against the deal.

Questions were raised about how the deal was passed, but after a review, the Australian Securities and Investments Commission decided not to challenge the vote in court.

Proxy voting is the process by which shareholders delegate their power to vote at an annual general meeting or extraordinary shareholders meeting to another member in their absence. It allows companies to have a quorum of votes at a meeting because it is impractical for all members to attend the annual general meeting.